iShares, the world's largest sponsor of ETFs, today rolled out
two dividend-focused ETFs that canvass emerging markets as well as
Asia-Pacific equities, the latest to target investor appetite for
Both the iShares Emerging Markets Dividend Index Fund
(NYSEArca:DVYE) and the iShares Asia/Pacific Dividend 30 Index Fund
(NYSEArca:DVYA) are linked to Dow Jones benchmarks, and each has an
annual expense ratio of 0.49 percent.
The funds join a growing roster of payout-seeking ETFs that
promise investors steady income at time when stock prices have been
volatile and bonds unusually low-yielding. Many ETF providers have
been stuffing the regulatory pipeline with dividend-focused ETFs in
an effort to snatch the demand for such instruments.
Still, strategies that deliver a blend of dividend-paying
equities with the prospective elements associated with developing
economies are still relatively rare, even if their projected
returns have exceeded those of the S&P 500 in the past year,
according to iShares data.
DVYE, Cheapest In Class
iShares' DVYE, for instance, while set to face the sizable $3.26
billion WisdomTree Emerging Markets Equity Income (NYSEArca:DEM),
can count its direct competitors in one hand. The fund is also the
cheapest of its kind.
DVYE's expense ratio is less than DEM's 0.63 percent price tag,
and is also cheaper than the one-year-old $213 million SPDR
Emerging Markets Dividend (NYSEArca:EDIV), which has a 0.59 percent
Even the EGShares Low Volatility Emerging Markets Dividend ETF
(NYSEArca:HILO), which adds a volatility screen to the strategy,
costs more at 0.85 percent.
DVYA's Targeted Exposure
By comparison, iShares Asia Pacific fund, DVYA, is even more
unique, serving up targeted exposure to dividend-paying stocks from
companies in Australia, Hong Kong, Japan, New Zealand and Singapore
in a mix that is a first for U.S. investors. The fund, too, is
The $710 million SPDR International Dividend (NYSEArca:DWX),
with a 0.45 percent annual expense ratio, offers some overlapping
exposure to iShares' DVYA as far as country exposure. However, most
international dividend ETFs on the market today from providers such
as WisdomTree, State Street Global Advisors, Invesco PowerShares,
Guggenheim and First Trust are broader in scope.
Focus On Australia
DVYA tracks a Dow Jones index that taps into
high-dividend-paying stocks in Australia, Hong Kong, Japan, New
Zealand and Singapore. It rebalances annually.
The fund, comprised of 30 names, allocates roughly a quarter of
its portfolio to financials, while consumer services and
telecommunications each take up just under 20 percent of the pie,
according to information on iShares' website.
DVYA's country allocation is heavily tilted toward Australia,
which represents nearly 45 percent of the portfolio, with Hong Kong
coming second at 21 percent. At the other end is Japan, snagging
less than a 7 percent share of the exposure.
Australia is also the focus of a WisdomTree dividend ETF,
"AUSE"-a fund that taps exclusively into that country's high-payout
names. Although AUSE has been around since 2006, it has
gathered an unimpressive $57 million in assets.
Emerging Market Breakdown
The new emerging markets ETF, DVYE, focuses on the top-100
dividend-paying emerging market companies, in a mix that's
rebalanced annually, iShares said on its website.
The fund allocates nearly a quarter of its portfolio to
Taiwanese securities, and also has Brazilian and South African
equities, each of the latter snagging more than 10 percent of the
Countries like Turkey, Malaysia, Thailand, Czech Republic,
Indonesia and Hong Kong also make the cut, at about 4 percent of
China, however, is bundled with nine other countries under the
"other" country allocation tag iShares uses to denote smaller
allocations, representing less than 3 percent of the portfolio.
DVYE has telecommunications, industrials and basic materials as
its largest sector allocations, each representing around 15 percent
of the portfolio.
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